A stablecoin called Recovery Coin will be used by Babel Finance to repay creditors $766 million

By leveraging customer cash to run an order-book deficit of $766 million, Babel Finance now owes creditors $766 million. The company's proprietary trading desk lost customer monies to dangerous trading activity that Babel blames to co-founder Wang Li.

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Co-founder Wang Li is accused by Babel Finance of losing $766 million through trading.

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After leveraging customer funds to build up an order-book deficit of $766 million, Babel Finance's proprietary trading desk was stung by the collapse of the cryptocurrency market. According to a recent filing by Babel, co-founder Wang Li, who was fired from his position as CEO in December, was to blame for the losses since "the dangerous trading operations appear to have been primarily instructed by Wang."

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According to a document acquired by Trade Algo, the crypto financial service provider has offered the recovery of debt due to creditors using revenue created by a new decentralized finance initiative minting "Babel Recovery Coins."

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The executive thinks a brand-new stablecoin can end the financial problem facing the ailing cryptocurrency lender. While requesting approval for a restructuring plan, Yang is working on submitting a moratorium of protection to the high court of Singapore, asking creditors not to take any further action against the company for up to six months.

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The strategy for repaying debtors with the new stablecoin

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The idea is described in full, and it employs Bitcoin and Ether as collateral to maintain the value of Hope's stablecoin near to a dollar using trading arbitrage incentives. Contrary to this, Babel's new stablecoin would use BTC or ETH as collateral. Most stablecoins linked to the US dollar are fully backed by cash and cash-equivalent assets. It will be interesting to see if a stablecoin can help Babel restructure its $766 million debt to its creditors.

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